Question

Calculate National Income by Income and Expenditure method.

(Figures are in crores) 6

i. Final Consumption Expenditure

Private Sector 350

Government Sector 100

ii. Mixed income of self-employed 35iii. Gross domestic fixed capital formation 70

iv. Opening stock 15

v. Compensation of employees 250

vi. Closing stock 25

vii. Imports 20

viii. Rent 75

ix. Consumption of fixed capital 10

x. Net indirect taxes 25

xi. Interest 25

xii. Net factor income from abroad -5

xiii. Exports 10

xiv. Profit 100​

Answer 1

National Income by Income Expenditure Method is Rs. 480 crores

Explanation:

National Income by Income method :

$NDP_{FC}$ = Mixed income of self-employed + Compensation of employees + Rent + Interest + Profit

             = 35 + 250 + 75 + 25 + 100

             = Rs. 485 crores

$NNP_{FC}$ = $NDP_{FC}$ + Net factor income from abroad

             = 485 + (-5)

             = Rs. 480 crores

National Income by Expenditure method :

$GDP_{MP}$ = Final Consumption Expenditure  by Private Sector + Final Consumption Expenditure by Government Sector + Gross domestic fixed capital formation + Change in stock (Closing stock - Opening stock) + Net Exports (Exports - Imports)

              = 350 + 100 + 70 + (25 - 15) + (10 - 20)

             = Rs. 520 crores

$NDP_{FC}$ = $GDP_{MP}$ - Consumption of fixed capital - Net indirect taxes + Net factor income from abroad

              = 520 - 10 - 25 + (-5)

              = Rs. 480 crores